Earns $0.29 Per Diluted Share, Excluding Special Items, for the 2002 Fourth Quarter
Reports 15.6% Annual Sales Gain to Record $1.2 Billion in Fiscal 2002
DAYVILLE, Conn., Sept. 5 /PRNewswire-FirstCall/ -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of $5.6 million for the fourth quarter of fiscal 2002, or $0.29 per share on a diluted basis, excluding special items, in line with the guidance previously provided by the Company.
Net sales for the fourth quarter of fiscal 2002 were $309.3 million, an increase of 14.7% from the $269.7 million recorded in the fourth quarter of fiscal 2001. The increase was primarily due to growth in the supernatural and mass market distribution channels of approximately 27% and 19%, respectively. Sales growth for the quarter, excluding the effect of acquisitions, was 13%.
Net income for the fourth quarter of fiscal 2002, excluding the effect of special items, increased 17.4% to $5.6 million, or $0.29 per diluted share, compared to $4.7 million, or $0.25 per diluted share, excluding special items, for the quarter ended July 31, 2001. Fourth quarter 2002 net income growth was partially offset by short-term incremental costs relating to the recent relocation of the Company's Hershey Import facility in New Jersey. The special items for the quarter ended July 31, 2002, consisted of a non-cash charge related to the change in fair value of interest rate swaps and related option agreements and moving and other costs related to the relocation of the Company's manufacturing subsidiary, Hershey Import. A special non-cash charge was recorded in the fourth quarter of fiscal 2001 related to the change in fair value of an interest rate swap and related option agreement. Net income including special items decreased 2.1 % to $4.1 million, or $0.21 per diluted share, for the fourth quarter of 2002 compared to $4.2 million, or $0.22 per diluted share, in the prior year period.
The Company adopted Statement of Financial Accounting Standards No. 142 (SFAS No. 142), "Goodwill and Other Intangible Assets," on August 1, 2001. The result of adopting SFAS No. 142 was a reduction in amortization of intangibles of approximately $0.2 million, or $0.01 per diluted share, in the fourth quarter of fiscal 2002.
Year End Results
Net sales for the twelve months ended July 31, 2002 were $1.2 billion, an increase of 15.6% over the $1.0 billion recorded in the comparable prior year period. Net sales, excluding the effect of acquisitions, increased 14.4%. Net income for the twelve months ended July 31, 2002, excluding special items, was $21.2 million, or $1.10 per diluted share, compared to $14.8 million, or $0.79 per diluted share, for the twelve months ended July 31, 2001. The special items for the twelve months ended July 31, 2002 included a non-cash charge related to the change in fair value of interest rate swaps and related option agreements, relocation, asset impairment and redundant rent expense related to moving the Company's Atlanta, GA distribution facility, incremental costs such as labor, utilities and rent related to the startup of its southern California distribution facility and labor, utilities, rent and severance related to relocating Hershey Import. Special items for the twelve months ended July 31, 2001 consisted of a non-cash charge related to the change in fair value of an interest rate swap and related option agreement, costs related to the expansion of the Company's New Oxford, PA distribution facility and asset impairment charges, primarily goodwill, associated with closing an unprofitable retail store. The result of adopting SFAS No. 142 was a reduction in amortization of intangibles of approximately $0.9 million, or $0.05 per diluted share, for the twelve months ended July 31, 2002. Net income including special items was $17.2 million, or $0.89 per diluted share, for the twelve months ended July 31, 2002 compared to $13.4 million, or $0.71 per diluted share, for the same period last year.
Comments from Management
Commenting on the fourth quarter results, Michael Funk, Chief Executive Officer, said, "Earnings for the quarter met our expectations. In terms of revenues, sales to our supernatural and mass market customers grew approximately 27% and 19%, respectively, and sales to our independent customers increased 6% compared to the same period last year. We are pleased with these results as we continue to execute at superior service levels and fill rates. Our results for fiscal year 2002 were strong given the projects we undertook. We successfully delivered four consecutive quarters of double digit sales and earnings growth, as we relocated our Atlanta, GA distribution facility and our subsidiary Hershey Import, launched a new distribution facility in Fontana, CA and acquired Boulder Fruit Express. Looking ahead, we are confident that our organization can continue this momentum into fiscal year 2003, and towards this end have recently signed a letter of intent to acquire Blooming Prairie Cooperative, the largest volume distributor of natural foods in the Midwest region. One of our stated goals has been to further broaden our presence and increase customer penetration in the fast growing Midwest market. Acquiring Blooming Prairie's Iowa City and Minneapolis facilities will provide us with an immediate physical base and growth platform to meet that goal as well as the volume to expand cost-effectively."
Mr. Funk continued, "In addition, we recently received approval from local planning and zoning officials to commence the expansion of our Chesterfield, NH distribution facility from its existing 117,000 square feet to 289,000 square feet, making it our largest distribution center. The benefits of additional warehouse space include improved capacity to service existing and new customers and more product diversity, giving us the opportunity to better balance products among the distribution centers on the Eastern seaboard."
The Company reaffirms its outlook for fiscal 2003, ending July 31, 2003, with revenues in the $1.15 billion to $1.17 billion range and net income, excluding special items, in the range of $1.18 - $1.20 per diluted share. The earnings per share outlook for the first quarter ending October 31, 2002 is $0.26 - $0.28 per diluted share, excluding special items. The Company's 2003 guidance excludes the impact of the proposed Blooming Prairie Cooperative acquisition.
Management will conduct a conference call and audio webcast at 11:00 a.m. ET on September 5, 2002 to review the Company's quarterly and annual results, market trends and future outlook. The conference call dial-in number is 703- 871-3722. The audio webcast will be available, on a listen only basis, via the Internet at www.viavid.com or at the Investor Relations section of the Company's website, www.unfi.com . Please allow extra time to the webcast to visit the site and download any software required to listen to the Internet broadcast. The online archive of the webcast will be available for 30 days.
About United Natural Foods
United Natural Foods, Inc. carries and distributes over 30,000 products to more than 7,000 customers in 50 states. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores and independent retail operators.
For more information on United Natural Foods, Inc., visit the Company's web-site at www.unfi.com .
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding United Natural's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, including but not limited to general business conditions, the impact of competition and our dependence on principal customers, see "Risk Factors" in the Company's quarterly report on Form 10-Q filed with the Commission on June 13, 2002, and its other filings under the Securities Exchange Act of 1934, as amended. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. United Natural is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by applicable laws.